A buy side analyst is an analyst who works with fund managers in mutual fund companies, financial advisory firms, and other firms, such as hedge funds, trusts, and proprietary traders. These firms buy large portions of securities for fund management. Recommendations made by buy side analysts are confidential and not for public consumption, unlike sell-side equity research.
Buy side analysts perform financial research on companies, deriving formulas and strategies that will help the buy side firm earn the highest possible risk-adjusted return on their capital. Analysts are usually engaged in reading current news and trends, tracking down valuable information, and building financial models.
A buy side analyst determines how favorable an investment seems and how well it fits with the fund’s investment strategy. Their recommendations are based on this research and analysis and made available exclusively to the firm that employs them. The success of a buy side analyst is measured by the quality of their financial modeling, analysis, and recommendations to the firm.
An analyst needs to obtain data from reliable sources, such as Bloomberg and CapIQ.
What Institutions does a Buy Side Analyst work for?
Buy side firms are investing institutions that purchase securities and other assets for themselves, as well as for their clients. They employ buy side analysts and portfolio managers who work side by side in order to add value to the business. The following is a list of the types of firms that employ buy side analysts:
Institutional and Retail Investors
How to Know if the Buy Side Analyst Job Fits?
Being a buy side analyst is about providing research and recommendations of equity portfolios to fund managers within the firm in order to help them decide which investments are valuable or risky. Buy side analysts with higher skill-sets and greater knowledge often earn higher pay than sell side analysts do. The following skills are needed:
Strong intellectual eye for investment opportunities
Consistently monitors market developments
Able to create productive, timely, and high-quality reports for investment decisions
Able to analyze risks and industry characteristics
Able to constantly monitor portfolio performance
Always up to date with global and economic trends
For more on what the job is like, explore our interactive Career Map.
Thank you for reading CFI’s guide to being a buy side analyst. Keep learning and preparing for a career on the buy side. These additional resources will help you on your way: